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I was pointing to growth, not revenue. A business that doubled its revenue in two years is great to have, even if it is not currently profitable.
by petilon 7y ago
I was pointing to growth, not revenue. A business that doubled its revenue in two years is great to have, even if it is not currently profitable.
- scarface74 7y agoSo if I sell $1 bills for $0.90, I guess I should be glad if my “revenues grow”?
- johnghanks 7y agoThere's a difference between selling something with a fixed cost (and a fixed value) for a fixed price and selling something which has unknown (and variable) value for a fixed price.
- scarface74 7y agoSo there are no variable costs in servers?
- deleted 7y ago[deleted]
- bretpiatt 7y agoDo you have any evidence to believe Google Cloud Platform is negative gross profit? My background in the industry would lead me to believe GCP (just the infrastructure, not the applications) is 70%+ gross margin with the hardware (and data center) cost (depreciation if capitalized) above the gross margin line. For a business at that growth rate running a GAAP negative net income is easy to do while still building a high quality profitable long term business.
- scarface74 7y agoI’ve made no statements either way. I was responding to the relatively naive idea that increasing revenue without profit was a measure of “success”. But, cloud companies don’t just have to worry about hardware and infrastructure. They also have to worry about software engineers, “enterprise sales solution architects” and a whole host of other costs.
- pembrook 7y agoIn logic class we called that a red herring fallacy. Google Cloud isn't in the business of selling $1 bills for 90 cents.
- scarface74 7y agoThe “fallacy” is offering evidence of success by just bringing up revenue. I made no claims on whether GCP is profitable or not.
- qeqeqeqe 7y agoBut we do know AWS's operating margin which is 29%. Spending a little to gain market share in a high margin business seems sound to me.
- jonas21 7y agoIf you expect to be able to acquire $1 bills for $0.80 in the future, then yes.
- scarface74 7y agoBecause Google has historically been a shining example of a company that could create profitable lines of business outside of advertising....
- peteretep 7y agoOnly if you think you can get the costs down.
- CydeWeys 7y agoIt's software as a service. Of course you can.
- outworlder 7y ago> It's software as a service. Of course you can. Which is directly tied to the underlying hardware. That they already optimize to death.
- FDSGSG 7y agoHave you seen how much other providers charge? It's the software you're paying for when you go with google, hardware is cheap.
- CydeWeys 7y agoAll cloud providers charge several times what the underlying hardware/electricity/peering is actually costing then. If the goal is to become immediately profitable rather than continue growing, then just stop reinvesting money into the business in the form of hiring and new data center construction.
- smt88 7y agoIt's also hardware as a service... and, crucially, customer service. Google is awful at that.
- d1zzy 7y agoInvesting (at a loss) many years to grow a business where you are starting behind others seems sensible. Let's not forget that Amazon had reported almost no profit or just loss for more than a decade. So as long as the business grows it seems like things are moving in the right direction.